Frontier Bank, SP Acquisition terminate merger agreement

Written by Dave Gallagher | The Bellingham Herald | October 5, 2009

Everett-based Frontier Bank wasn’t able to complete the merger with SP Acquistion, which was expected to help the bank out of its financial difficulties. A press release from the company below. Frontier’s stock fell 25 percent (about 25 cents) as of 11 a.m. on the news.

Frontier Financial Corporation (NASDAQ: FTBK) (“Frontier”) and SP Acquisition Holdings, Inc. (NYSE Amex: DSP) (“SPAH”) today jointly announced that they have mutually agreed to terminate the Agreement and Plan of Merger, dated as of July 30, 2009, by and between SPAH and Frontier, as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of August 10, 2009, effective immediately, due to the fact that certain closing conditions contained in the merger agreement could not be met. As a result, the special meetings of SPAH’s stockholders and warrant holders and Frontier’s shareholders scheduled to be held on October 8, 2009 have been cancelled.

Pat Fahey, Chairman and Chief Executive Officer of Frontier, noted that “After working diligently for several months, the parties could not secure the required regulatory approvals in sufficient time to complete the transaction by the October 10, 2009 deadline. We will continue to aggressively work to resolve our loan problems, and shore up our capital position.”

Frontier previously announced its continued participation in the Federal Deposit Insurance Corporation’s (“FDIC”) voluntary Transaction Account Guarantee (“TAG”) portion of the Temporary Liquidity Guarantee Program through June 30, 2010. Under this program, Frontier’s noninterest bearing transaction accounts and qualified NOW checking accounts are fully guaranteed by the FDIC for an unlimited amount of coverage. The coverage under the TAG program is in addition to, and separate from, the coverage available under the FDIC’s general deposit insurance protection.

Because of the termination of the merger agreement and pursuant to the terms of its amended and restated certificate of incorporation, SPAH’s corporate existence will cease on October 10, 2009. The trustee will commence liquidating the investments constituting the trust account and distribute the proceeds to the public stockholders of SPAH in accordance with SPAH’s amended and restated certificate of incorporation, the Investment Management Trust Agreement, and applicable law.